The global artificial intelligence (AI) market is witnessing remarkable growth, with its value soaring to approximately 279 billion USD as of 2024. This figure indicates an impressive increase of around 80 billion USD compared to the previous year, largely driven by the enhanced application of new technologies. The rise of generative AI, which saw its usage jump by 17% year-on-year, has particularly impacted industries through advancements in natural language processing (NLP) and the integration of AI within chatbots and automation tools.
One major contributor to this conversation is Jan Szilagyi, CEO and co-founder of Reflexivity, who recently shared insights on the impact of AI on stock trading during his appearance on CNBC's Squawk Box. Szilagyi emphasizes the growing reliance of leading hedge funds on AI software as complementary tools to their existing analytical methods. He asserts, "AI can surpass human intelligence in stock trading," reflecting the sentiment among financial experts about the potential of AI to revolutionize this domain.
According to Szilagyi, Reflexivity has developed platforms integrating large language model (LLM) interfaces, allowing investors to consolidate data from various sources. This technology, he claims, can reduce data analysis time from two hours to just two minutes. Users can query the system, which automatically retrieves, analyzes data, and presents results, showcasing the efficiency and predictive power of AI.
A notable aspect of Reflexivity's technology is its ability to identify historical trends and patterns, utilizing data from approximately 12 to 15 similar prior occasions, relating to specific economic conditions. By doing so, the AI suggests stocks poised for significant returns. Szilagyi's claims are backed by the reality of several accurate predictions made by the AI system. "AI correctly predicted many major market trends this year," he stated, providing credibility to the technology's capability to forecast market movements.
Notably, the AI also anticipated the market peak back in July and correctly pointed out the subsequent recovery and bottoming out of the market. Szilagyi acknowledges, though, there are instances where predictions may surface slightly early or off the mark. For example, AI indicated increased trends before the recent Federal Reserve meeting, which led to an unexpected announcement of interest rate cuts—two less than the anticipated four for the upcoming year.
Despite these occasional miscalculations, Szilagyi firmly believes the technology is largely sound and based on probabilistic assessments: "The system only conveys confidence levels, indicating, for example, 'there's a 70% chance this will happen.'" He argues there’s nothing inherently superior about human intelligence over AI when it pertains to analyzing stock trends. Given sufficient computational power and continuous improvement, he predicts AI will increasingly dominate this field.
Looking toward the future, he foresees AI potentially replacing humans within the next five to ten years, particularly challenging for areas like private markets, where data availability is limited, making it difficult for AI training. Nonetheless, Szilagyi maintains, even if AI doesn't completely replace humans shortly, its growing capabilities are on track to reshape stock trading landscapes drastically.
Currently, the AI application's rise across various sectors is noteworthy, with the global AI market exhibiting substantial growth indicators. The recent valuation of 279 billion USD suggests not just promise but also urgency for investors and companies to adapt to these advancements. Szilagyi fits seamlessly within this picture, as he describes how AI’s integration within finance and trading is setting the stage for future developments. This shift toward AI and its analytical prowess signifies the potential for more efficient trading strategies moving forward, affirming the belief within the industry: the era of AI is well underway.
With only days left before the close out of 2024, companies are reflecting on the year. While some may deem it forgettable, industry leaders, particularly within technology, are recognizing pivotal moments and milestones achieved throughout 2024. This acknowledgment sets the foundation for what lies ahead, with significant importance placed on continuing AI development and its broad application across various sectors.